Rapaport Magazine

Tax Relief

India June Market Report

By Zainab Morbiwala

The age-old adage — Where there is a will, there is a way — proved itself true with the recent rollback of the 1 percent excise duty on branded and unbranded jewelry that had been proposed by the Union Government of India in its recent budget. It took a 21-day nationwide strike by the jewelry industry and intense political pressure from the All India Gems and Jewellery Trade Federation (GJF), but the government reversed its decision on imposing the new taxes less than two months after they were proposed.

A gracious winner, GJF officials were quick to thank India’s Finance Minister Pranab Mukherjee for the decision to pull back from the new taxes.


The strike had a considerable cost in lost taxes for the government and lost sales for the industry, especially because it occurred at the peak of the wedding season. As business resumed, Rajiv Jain, chairman of the Gem and Jewellery Export Promotion Council (GJEPC), said that “with the price of gold close to its record high of 30,000 rupees — approximately $550 — per ten gram, we are seeing a lot of people moving to other metals like silver or platinum in combination with gold. Internationally, it is still the low-price-point items that are moving.” He noted that there has been a significant improvement in the U.S. market, “although Europe still needs to see some correction. We are awaiting the Las Vegas show and expecting it to bring in a turnaround” for the industry.

A report by Fitch Ratings predicts “muted demand” in 2012 for the Indian gems and jewelry industry, with volume growth of around 4 percent. It attributed the weak demand to a reduction in discretionary spending in both the domestic and export markets, while reporting that demand from traditional export markets — the U.S., Hong Kong and the United Arab Emirates (UAE) — has improved from 2009 levels. The report further cautioned that the emergence of alternative investment options, such as gold exchange-traded funds (ETFs), gold coins and bullion, may structurally reduce demand for gold jewelry as an investment.


Ecommerce — along with its related social media platforms — is having an impact on domestic retailing. The Indian consumer is not hesitant about shopping online across various product sectors, including jewelry. In response, gem and jewelry retailers and manufacturers are using various social media to reach their target audience.

Recently, it was reported that Forevermark, the diamond brand from the De Beers group of companies, has launched a multilanguage iPad app for China, Hong Kong, Japan and India. The free application, available for download in the Lifestyle section of the Apple App Store, takes the user through the journey of a Forevermark diamond from the mine where it is unearthed all the way through cutting, polishing and jewelry design.

Navin Sadarangani, director of NYUZ, a Mumbai-based provider of training and services to the retail jewelry industry, noted that “not every jeweler realizes the value of social media. A few have been using them effectively but many others need to take advantage of this almost-free media to promote their companies and their products.” As an example, Sadarangani cited Mumbai-based Manubhai Jewellers, which ran a contest around Valentine’s Day with the theme of “How did you meet your Valentine?” The contest required users to upload a picture of the couple and write an essay of 200 words. “It was an excellent online exercise that ended with a real-life introduction to the store,” he said, adding that “The contest winner made it into the newspapers and there were photos online, too.”

Sadarangani offered advice to Indian companies on using social media. For a high-end jewelry store, he said, social media can be used “to showcase some designs of high-end diamond jewelry to get a feel for how much they are liked by inviting views. This kind of online research can help decide which designs to invest time, effort and money in producing.”

Sadarangani had additional suggestions. A national brand, for example, could use social media to launch regional collections to a regional geographical audience that is online in its group. Established brands like Gili, Nirvana and Sparkles could use these platforms to solicit comments from their customers on exceptional customer service received at their locations. Jewelry shows, he said, also can be promoted through social media.


Three Indian diamond dealers and a dealer from the Democratic Republic of Congo (DRC) were arrested in Zimbabwe in May on charges of possessing and dealing in diamonds worth ten of thousands of dollars that had no Kimberley Process (KP) certificates. Authorities said the dealers were in possession of 272 uncertified rough diamonds at the time of their arrest.



  • Summer vacation has slowed activity in the local market.
  • Domestic buyers are hoping for a more stable rupee-dollar exchange rate.
  • Overall liquidity in the market is tight.
  • Demand for SI goods continues to be high.
  • In preparing for Las Vegas, the market is feeling positive.

Article from the Rapaport Magazine - June 2012. To subscribe click here.

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